"Shares in the FTSE 250 company jumped as much as 16% in early trading on Friday before settling nearly 7% higher, offering brief respite for a business that has seen its market valuation collapse from £22 billion during the pandemic boom to barely £1.6 billion today. The payout follows Kroger's decision to cancel the opening of a fourth Ocado-powered customer fulfilment centre in Charlotte, North Carolina, one of two facilities previously scheduled for 2026."
"Kroger will proceed with five remaining sites, plus a sixth still due to open in Phoenix next year, but the retrenchment has deepened concerns about Ocado's ability to scale its technology in the world's largest grocery market. What began in 2018 as a 20-warehouse vision to transform US grocery logistics has so far delivered just eight, and even those have struggled to overcome the formidable economics of long-distance food delivery across vast American territories."
Kroger agreed to pay Ocado $350 million (£276m) in compensation after cancelling the opening of a fourth Ocado-powered customer fulfilment centre in Charlotte, North Carolina. Shares in Ocado jumped as much as 16% intraday before settling nearly 7% higher, temporarily easing pressure on a company whose market valuation fell from £22 billion during the pandemic to about £1.6 billion. Kroger recently said it would shut three automated warehouses because they had "not met financial expectations" while proceeding with five remaining sites and a sixth due to open in Phoenix. The original 2018 plan for 20 warehouses has produced eight, underscoring difficulties in scaling robotic fulfilment amid the economics of long-distance grocery delivery in the US. Ocado and Kroger remain partners and will focus on driving profitable volume through the remaining fulfilment centres, with Ocado describing itself as "excited about the opportunity" in the US and "investing significant resources" into supporting Kroger's logistics operations.
Read at Business Matters
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